INVA

Innoviva Inc

Healthcare


Presented:06/19/2018
Price:$14.40
Cap:$1.64B
Current Price:$19.88
Cap:$1.24B

Presented

Date06/19/2018
Price$14.40
Market Cap$1.64B
Ent Value$2.32B
P/E Ratio11.25x
Book ValueN/A
Div Yield0%
Shares O/S113.57M
Ave Daily Vol907,780
Short Int29.11%

Current

Price$19.88
Market Cap$1.24B
Innoviva, Inc. engages in the development, commercialization, and financial management of bio-pharmaceuticals. Its portfolio includes Relvar Breo Ellipta, which is a once-daily combination medicine consisting of a long-acting beta2 agonist, vilanterol, and an inhaled corticosteroid, fluticasone furoate; and Anoro Ellipta, a once-daily medicine combining a long-acting muscarinic antagonist, umeclidinium bromide, LABA, VI. The company was founded by P. Roy Vagelos, Mathai Mammen, and George M. Whitesides in November 1996 and is headquartered in Brisbane, CA.

Publicly traded companies mentioned herein: GlaxoSmithKline PLC (GSK), Innoviva Inc (INVA), Mylan NV (MYL)

Highlights

The presenter sees meaningful risk to Innoviva’s (INVA) royalty stream following the approval of Trelegy Ellipta (fluticasone furoate, umeclidinium & vilanterol). It is a new, once-daily ICS/LABA/LAMA triple therapy for chronic obstructive pulmonary disease (COPD). INVA’s partner is GlaxoSmithKline (GSK), and the FDA recently expanded the indication for Trelegy to include patients with chronic bronchitis and/or emphysema (April 2018). The problem is that INVA earns a materially lower royalty rate on the triple (1.5%) compared to 6.5% - 15% on the other commercialized COPD therapies it earns a royalty on (also via partnership with GSK). Additionally, if/when generic Advair hits the market, it is likely to have a negative impact on pricing across the space. The presenter expects to see cannibalization that the Street is not modeling, and based on a DCF model that adjusts for the mix shift to Trelegy, he estimates the fair present value of the stock to be ~$7.

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